Utility Deposit Bond - Arizona Public Service Company (APS) in Arizona

Brief Summary

APS will take a surety bond in place of a cash security deposit, and the bond has to equal the deposit APS asks for. For a business that APS sizes at up to two and a half times its biggest monthly bill, that can free up a lot of cash. You pay a premium to the surety instead of leaving the full deposit sitting with the utility.

Arizona Public Service Company asks for a security deposit when a new customer cannot establish credit. Under APS Service Schedule 1, Section 3, a surety bond equal to the required deposit is accepted from residential applicants, and nonresidential applicants can post a surety bond, irrevocable letter of credit or assignment of monies instead of cash. APS sets the deposit amount, so the bond amount comes from APS.

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How to Apply for an Utility Deposit Bond:

• Get the required deposit amount for each service location from APS.
• Have the account holder or business name exactly as it appears on the APS account.
• Complete the bond application and review the quoted premium.
• Pay the premium and receive the executed bond with APS named as obligee.
• Send the bond to APS in the form and manner APS directs before service is established.

Detailed Information About the Arizona Utility Deposit Bond:

When APS asks for a deposit

APS publishes its customer terms as Service Schedule 1, Terms and Conditions for Standard Offer and Direct Access Services, filed with the Arizona Corporation Commission. Section 3 covers credit and deposits. If an applicant cannot establish credit, or left an unpaid final bill with another utility, APS requires a security deposit to secure payment of bills.

Residential applicants can avoid a deposit with a good APS payment history in the past two years, an acceptable credit rating, or a credit letter from their last electric utility. Nonresidential applicants post a cash deposit unless they had comparable APS service in the past two years with a clean payment record.

How big the deposit gets

Residential deposits will not exceed two times the average monthly bill as estimated by APS. Nonresidential deposits will not exceed two and one half times the maximum monthly billing as estimated by APS. A separate deposit may be required for each service location, and the amount can go up or down if usage changes by more than 10% for residential accounts or 5% for nonresidential accounts within 12 months.

Where the bond fits

Schedule 1 lets a residential applicant provide a surety bond in a sum equal to the required deposit. For nonresidential applicants it lists a surety bond, an irrevocable letter of credit or an assignment of monies in an amount equal to the deposit. The bond guarantees APS that your utility bills will be paid. If they are not, APS can claim on the bond and the surety will look to you for repayment.

How long it stays in place

Residential deposits and other credit instruments expire or are returned after 12 consecutive months of service if you were not delinquent more than twice and did not file bankruptcy in the last 12 months. Nonresidential deposits and noncash deposits are reviewed after 24 months and returned if the payment record is clean and APS finds your financial condition does not warrant keeping it. Confirm the bond form and where to send it with APS before the bond is issued.

Eligibility and Requirements for an Arizona Utility Deposit Bond:

• Bond amount equal to the security deposit APS requires.
• Residential deposits capped at two times the estimated average monthly bill.
• Nonresidential deposits capped at two and one half times the estimated maximum monthly billing.
• A separate deposit, and so a separate bond amount, may apply to each service location.
• Credit review of the owner or business. Credit affects the premium rate.

Arizona Utility Deposit Bond FAQs:

Official and Additional Resources for the Arizona Utility Deposit Bond: